Nordstrom 2004 Annual Report Download - page 25

notes to consolidated financial statements
The following tables set forth the information for our reportable segments and a reconciliation to the consolidated totals:
Retail Credit Catalog/ Corporate
Fiscal Year 2004 Stores Operations Internet and Other Eliminations Total
Net sales (a) $6,756,054 — $375,334 — — $7,131,388
Other income including finance charge, net (8,656) $202,359 (208) $(20,553) — 172,942
Intersegment revenues 26,546 36,645 — — $(63,191) —
Interest expense, net (413) (23,522) 148 (53,641) — (77,428)
Depreciation and amortization 233,081 1,107 4,395 26,186 — 264,769
Earnings before taxes 789,204 39,503 34,324 (215,750) — 647,281
Goodwill 35,998 — 15,716 — — 51,714
Tradename 84,000 — — — — 84,000
Assets (b)(c) 2,665,425 1,030,941 103,960 805,064 — 4,605,390
Capital expenditures 212,729 605 6,196 27,321 — 246,851
Retail Credit Catalog/ Corporate
Fiscal Year 2003 Stores Operations Internet and Other Eliminations Total
Net sales (a) $6,156,028 — $292,650 — — $6,448,678
Other income including finance charge, net (7,563) $176,551 (602) $(13,296) — 155,090
Intersegment revenues 25,652 34,276 — — $(59,928) —
Interest expense, net (697) (22,122) 105 (68,238) — (90,952)
Depreciation and amortization 224,018 2,838 5,052 18,775 — 250,683
Earnings before taxes 582,737 17,473 8,625 (210,694) — 398,141
Goodwill 35,998 — 15,716 — — 51,714
Tradename 84,000 — — — — 84,000
Assets (b)(c) 2,717,462 878,541 93,070 880,160 — 4,569,233
Capital expenditures 242,331 1,104 4,729 10,150 — 258,314
Retail Credit Catalog/ Corporate
Fiscal Year 2002 Stores Operations Internet and Other Eliminations Total
Net sales (a) $5,691,097 — $253,559 — — $5,944,656
Other income including finance charge, net (1,999) $165,564 (11,721) $(12,555) — 139,289
Intersegment revenues 29,737 32,783 — — $(62,520) —
Interest expense, net (191) (23,582) (972) (57,176) — (81,921)
Depreciation and amortization 201,861 3,212 4,977 23,881 — 233,931
Earnings before taxes and cumulative effect
of accounting change 450,476 21,194 (21,926) (254,120) — 195,624
Goodwill 35,998 — 15,716 — — 51,714
Tradename 84,000 — — — — 84,000
Assets (b)(c) 2,718,781 753,377 89,512 623,599 — 4,185,269
Capital expenditures 230,864 2,058 4,507 90,737 — 328,166
(a) Retail stores net sales includes foreign sales of $94,994, $92,524, and $82,126 for 2004, 2003 and 2002.
(b) Retail stores assets include foreign assets of $207,095, $234,459, and $219,861 at the end of 2004 2003, and 2002.
(c) Segment assets in Corporate and Other include unallocated assets in corporate headquarters, consisting primarily of cash, land, buildings
and equipment, and deferred tax assets.
notes to consolidated financial statements
Note 17: Impairment
In 2002, we recognized a charge of $15,570 to write-down an IT
investment in a supply chain software application intended to support
our private label division. A strategic decision was made not to expand
our private label division to support an external wholesale business,
resulting in impairment to an in-process software project designed to
support this activity. This charge to the Retail Stores segment reduced
this asset to its estimated market value. The charge was recorded in
selling, general and administrative expense.
Note 18: Nordstrom.com
In May 2002, we paid $70,000 for the outstanding shares of
Nordstrom.com, Inc. series C preferred stock in fulfillment of our put
agreement with the minority interest holders of Nordstrom.com LLC.
The excess of the purchase price over the fair market value of the
preferred stock and professional fees resulted in a one-time charge
of $42,736. No tax benefit was recognized, as we do not believe it is
probable that this benefit will be realized. Purchase of the minority
interest of Nordstrom.com also resulted in goodwill of $15,716.
In July 2002, we purchased 3,608 Nordstrom.com options and 470
warrants for $11,802. We recognized $10,432 of expense related to
the purchase of these options and warrants.
The following table presents the charges associated with the minority
interest purchase and reintegration costs:
Fiscal Year 2002
Excess of the purchase price over the fair market
value of the preferred stock $40,389
Nordstrom.com option/warrant buyback expense 10,432
Professional fees incurred 2,347
Total $53,168
Note 19: Self Insurance
We are self insured for certain losses related to health and welfare,
workers’ compensation and general liability. We record estimates of
the total cost of claims incurred as of the balance sheet date. These
estimates are based on analysis of historical data and independent
actuarial estimates.
Workers’ Compensation – we have a deductible per claim of $1,000
or less and no policy limits. Our workers’ compensation reserve was
$64,446 and $57,421 at the end of 2004 and 2003 and our expense
was $29,263, $33,782 and $21,368 in 2004, 2003 and 2002.
General Liability – we have a deductible per claim of $1,000 or less
and a policy limit up to $150,000. Our general liability insurance
reserve was $9,872 and $10,266 at the end of 2004 and 2003.
Health and Welfare – We are self insured for our health and welfare
coverage and do not have stop-loss coverage. Participants contribute
to the cost of their coverage and are subject to certain plan limits
and deductibles. Our health and welfare reserve was $10,545 and
$9,998 at the end of 2004 and 2003.
Note 20: Commitments and Contingent Liabilities
We are involved in routine claims, proceedings, and litigation arising
from the normal course of our business. We do not believe any such
claim, proceeding or litigation, either alone or in aggregate, will
have a material impact on our results of operations, financial position,
or liquidity.
We are routinely audited for tax compliance by the federal, state, local
and foreign jurisdictions in which we operate. The audits generally
cover several years and issues raised in an audit can impact other
years that are available to be audited. We have accrued $25,000 for
anticipated exposures for audit issues in all years that are open to
adjustment by a tax jurisdiction.
Additionally, in connection with the purchase of foreign merchandise,
we have outstanding import letters of credit totaling $28,961 and
standby letters of credit totaling $1,370 as of January 29, 2005.
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